Correlation Between Sound Shore and Mairs Power
Can any of the company-specific risk be diversified away by investing in both Sound Shore and Mairs Power at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sound Shore and Mairs Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Shore Fund and Mairs Power Growth, you can compare the effects of market volatilities on Sound Shore and Mairs Power and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sound Shore with a short position of Mairs Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Shore and Mairs Power.
Diversification Opportunities for Sound Shore and Mairs Power
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sound and Mairs is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sound Shore Fund and Mairs Power Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mairs Power Growth and Sound Shore is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sound Shore Fund are associated (or correlated) with Mairs Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mairs Power Growth has no effect on the direction of Sound Shore i.e., Sound Shore and Mairs Power go up and down completely randomly.
Pair Corralation between Sound Shore and Mairs Power
Assuming the 90 days horizon Sound Shore is expected to generate 4.7 times less return on investment than Mairs Power. In addition to that, Sound Shore is 1.45 times more volatile than Mairs Power Growth. It trades about 0.01 of its total potential returns per unit of risk. Mairs Power Growth is currently generating about 0.09 per unit of volatility. If you would invest 12,553 in Mairs Power Growth on October 25, 2024 and sell it today you would earn a total of 5,152 from holding Mairs Power Growth or generate 41.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sound Shore Fund vs. Mairs Power Growth
Performance |
| Timeline |
| Sound Shore Fund |
| Mairs Power Growth |
Sound Shore and Mairs Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Shore and Mairs Power
The main advantage of trading using opposite Sound Shore and Mairs Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Shore position performs unexpectedly, Mairs Power can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mairs Power will offset losses from the drop in Mairs Power's long position.| Sound Shore vs. Transamerica Intermediate Muni | Sound Shore vs. Blrc Sgy Mnp | Sound Shore vs. Blackrock Pa Muni | Sound Shore vs. Lord Abbett Intermediate |
| Mairs Power vs. Meridian Trarian Fund | Mairs Power vs. Mairs Power Balanced | Mairs Power vs. Clipper Fund Inc | Mairs Power vs. Meridian Growth Fund |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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